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Wednesday, March 13, 2013

Housing: It’s Becoming a Seller’s Market

The National Association of Realtors said on Thursday what home buyers in
many parts of the United States have known for months: it’s becoming a seller’s
market.

The number of homes listed for sale in January fell by 4.9%, leaving 1.74
million properties on the market. That’s the lowest since December of 1999, when
there were 1.71 million homes on the market. By contrast, there were 2.91
million homes on the market two years ago at this time.

After adjusting for seasonal factors, home sales rose by just 0.4% in
January, to an annual rate of 4.92 million units. Still, that’s up from 9.1% one
year ago.

The upshot is that there’s a growing pool of buyers chasing a shrinking
supply of homes. If the trend holds, prices will keep going up. At the current
pace of sales, it would take just 4.2 months to sell the current supply of homes
available for sale, down from a 6.2 months’ supply one year ago.

While inventories typically increase in the spring, the Realtors’ group has
expressed growing concerns that sales volumes are being held back by the lack of
choice. This is good news for homeowners who have watched home prices drop over
the last six years, but it’s bad news for buyers—and for anyone that makes their
living selling real estate.

Inventory declines have been the most dramatic in California, Arizona, and
other markets that witnessed some of the largest home price declines. Those
cities have large numbers of underwater borrowers—people who owe more than their
homes are worth—while many others may have equity but aren’t willing to sell
because prices have fallen so far.

Investors have also been aggressive in buying up properties that are selling
for less than their replacement cost.

Home sales could rise to 5.2 million units this year, an increase of nearly
12% from last year, according to economists at Goldman
SachsGS-4.36%. They base their forecast on household
formation and demographics, which both suggest rising demand for housing in the
coming years, and affordability measures such as mortgage rates and home
prices.

But the economists note that there’s a considerable amount of uncertainty
that could make those targets hard to hit, particularly if there’s nothing for
would-be buyers to purchase.

If you
are interested in selling your home please contact the Andrea Crossman Group for more
information 616-355-6387